How to Calculate Bitcoin’s Next Price Move

Crypto markets are breaking out to all-time highs. The total market cap of all crypto assets, which includes Bitcoin, now totals $165 billion, a 150 percent gain from mid-July lows of $67 billion and a whopping 16 times crypto’s value of $11 billion at this time last year.

Bitcoin itself has reached another all-time high of $4,650, up about three percent in the past 24 hours, and many are wondering where it can go from there. Since cryptocurrencies carry a high degree of speculative value and very little fundamental value, technical analysis can offer a roadmap to future price moves. For this analysis, I am applying trend-based Fibonacci extensions, using TradingView’s platform.

Trend-based Fibonacci Extensions use past price behavior to establish price targets and potential reversal areas. They can be a guide for unchartered territory at new highs and new lows. Remember, these indicators should not be used in isolation and are only to provide context to price moves.

Technical analysts have noted a mathematical relationship between past and future price moves based on the Fibonacci series, a sequence of numbers in which each number is the sum of the two preceding ones. This “golden ratio” is witnessed throughout the natural world and can be found in plant growth, astronomical patterns and even financial markets. Trend-based Fibonacci Extensions are a predictive technical indicator that applies this “golden ratio” to asset price movements.

The Fibonacci Extension is drawn over one wave of prices to provide estimates on the magnitude of the next price wave. The important Fibonacci levels to watch are: 61.8 percent, 100 percent, 138.2 percent, 161.8 percent, 200 percent, 238.2 percent, and 261.8 percent

There are three price points to consider in an uptrend: the former swing low, the most recent swing high and the most recent swing low. The Fibonacci Extension then plots future levels based on these three price points.

Technical analysis can offer a roadmap to where Bitcoin prices are headed next. …read more